U.S. Retirement End-Investor 2022
Fostering Comprehensive Relationships
Segment, Analyze, Strategize
- Explore the adoption and development of advisor managed account programs
- Assess competition for individual retirement account (IRA) rollovers
- Understand the implications of new IRA-related laws and requirements
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This annual report represents Cerulli’s investor-level retirement research. The report features detailed coverage of the IRA market, including Cerulli’s IRA rollover sizing model, with in-depth market analysis and projections. The report also includes comprehensive coverage of 401(k) plan participants and IRA owners, examining savings behavior and sources of financial stress. Additionally, this research explores retirement investor trends for different age and wealth cohorts.
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A Note From the Author
The $700 Billion IRA Rollover Opportunity
Shawn O'Brien, CFA
Shawn leads the U.S. Retirement research practice, which focuses on the defined contribution (DC) and individual retirement account (IRA) markets. He also leads and supports strategic consulting projects for asset managers on their DC-related market entry and product distribution strategies.
Prior to joining Cerulli Associates, Shawn worked as a Research Associate at Harvard Business School, where he co-authored case studies on investment management for professional and personal investors and managing and innovating in financial services. Prior to that, he worked in the Currency Management group at State Street Global Markets, employing currency overlay strategies for large asset managers and asset owners.
Full biography here.
Rollovers from defined contribution (DC) plans to individual retirement accounts (IRAs) reached $700 billion in 2021 and advisors are taking notice, intermediating $444 billion in rollover assets. According to our findings, 86% of these rollovers are through existing participant-advisor relationships—as opposed to new advisor relationships—highlighting the importance of establishing relationships with participants during their working years, prior to life changes that often trigger rollover events, including retirement.
There is still plenty of room for retirement providers to step in. Advisor-intermediated rollovers accounted for less than half (43%) of the number of individual DC to IRA rollover transactions. At the same time, the cumulative asset value is over half—57.7%. Furthermore, the average balance for advisor-intermediated IRAs ($211,100) is significantly higher than for self-directed IRAs ($120,800).
As providers evaluate this sizable IRA rollover opportunity, they must contend with investor inertia. More than half (56%) of active 401(k) plan participants allowed assets to remain in a former employer’s plan after separating from service at some point in their careers and 21.6% of all DC plan assets eligible for distribution in 2021 were rolled into an IRA, a decrease from 25.4% two years ago. This decline was matched by an increase in assets remaining in-plan.
What steps should providers undertake to help investors pursue optimal retirement outcomes? Continue to explore this theme and holistically assess the 401(k) and IRA markets with our latest research, U.S. Retirement End-Investor 2022.
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